Canada’s Mkango aims for rare earths production from 2020

* Analysts forecast rise in rare earth prices

* Rare earths mainly produced by China, small miners

* Green technology drives demand for rare metals

By Barbara Lewis

LONDON, June 26 Canada’s Mkango Resources
, one of a handful of rare earth miners outside
China, aims to start production in Malawi in 2020 to catch an
expected leap in demand for the metals that are used in electric
vehicles and other new technologies.

Demand for rare earths, which range from neodymium used in
electric motors to lanthanum used to make batteries, is
increasing with the emergence of new, greener technology.

While production of coal, iron ore and other bulk
commodities is dominated by major mining firms such as BHP
and Rio Tinto , rare earths are
mostly produced by China and small mining firms such as Mkango.

“We think we will be in production in three years’ time,
just at the right time,” William Dawes, the chief executive of
Mkango, which is listed in Toronto and London, told Reuters.

By 2021, he said Mkango would reach full output of about
3,000 tonnes per year of rare earths from the southern African
nation. That would include 1,000 tonnes of praesodymium,
neodymium, dysprosium and terbium, used in new electric motors.

Dawes said a rise in rare earth prices was being driven by
growing demand, rather than the kind of speculative bubble that
drove up prices in 2011 when China dominated production and then
prompted a crash that pushed many explorers out of the business.

“Very few rare earth projects made it to the pre-feasibility
stage and beyond,” he said. “We are one of the few companies to
make it over this hurdle, so well-placed as the market
recovers.”

Ryan Castilloux, an analyst at Adamas Intelligence
consultancy, said there were 36 projects at various stages of
pre-production development outside of China.

Of these, he said about 60 percent were put on hold in the
last three years because of weak rare earth prices, although
prices were expected to recover.

Castilloux forecast doubling global demand for neodymium
oxide and praseodymium oxide by 2025 compared with 2016 levels,
which he said could create another challenge for miners.

If miners could not keep up with demand and prices climbed
too high, industries might turn to technologies that did not use
rare earths, even if they were less efficient.

Dawes said any rapid surge in the price of neodymium,
currently trading around $45 per kilogram, could encourage the
vehicle industry to turn to induction motors, which do not
contain rare earths but which are heavier and less effective
than permanent magnet motors that do use rare metals.

Analysts say the auto industry is building flexibility into
its new generation of electric vehicle platforms to allow a
switch between either type of motor.

Other rare earth miners outside China include Australia’s
Lynas Corp, whose Mount Weld is regarded as producing
the highest grade of rare earths mine in the world.
(Editing by Edmund Blair)